One thing is for sure--the dependence on international trade, for sourcing of products, components and raw materials; for markets and distribution; and for countries seeking to bolster their financial situation, has never been as great and is likely to become even more so. The Internet and the availability of information about markets, products and the best values is clearly an important driver in this proliferation of trade. In the June issue, World Trade Magazine examined the Top 30 countries for trade and expansion, and that analysis showed the extent that trade plays in the lives of people in those countries.

What is the role of transportation, logistics and the supply chain in all of this? In days gone by, logistics was a tool to get products and materials from A to B, not a part of a strategic evaluation working in a silo situation within the company. The walls are coming down slowly but surely, and one of the primary drivers in this change is the flexibility of sourcing and market decisions and the ability of transportation and logistics to keep up with the pace of that change. In our consulting work we are finding that shippers and consignees are continually evaluating sourcing locations, and international markets, looking at the trade-offs between cost, quality, production availability, reliability and the like. The logistics function must keep up.

And in organizations like Wal-Mart and Nike, which use the supply chain as a competitive advantage, sourcing and logistics go hand in hand as an integrated decision process. The pure cost of transportation and supply chain elements has its importance, but the impact of mode, carrier and chain process decisions has a far greater impact on the bottom line. The opportunity cost of lost revenue, the inventory required due to pipeline delays or unreliability, and the difficulty in reaching remote sources or markets demand that the sourcing/trading decision be made hand-in-hand with the logistics decision. The best companies employ these practices. Further, they quantify as many of these elements as they can, and use this feedback to make the next round of decisions.

The most dominant overseas trading partner, and in many ways the most interesting, is China. The PRC has grown spectacularly as a source of imports for the U.S., and consumption in China--with its 1.3 million mouths and pairs of hands, feet and eyes--is also growing handsomely. World political headlines further support the awareness of China as a trading partner for America. But our neighbors north and south, Canada and Mexico, are frequently overlooked in terms of their importance as trading partners. For example, when one thinks of textiles and apparel, China and other Asian origins come to mind first, as well as selected Caribbean or Central American countries in terms of volume, and Italy and France in terms of style and exports. But Mexico actually dwarfs China in apparel exports to the US, with 2,290 million SME (square meter equivalents) compared in China's 976 million SME in 2001. The value of each SME from China is 38 percent greater at $4.72 per SME, but in any measure Mexico's apparel exports are that much greater than China's. Perhaps logistics uncertainty in China has a limiting impact on the growth of trade there, at least in the example of the apparel industry.

Now think of the logistics and transportation aspects of the North American trade. Canada is clearly an easy place to do business with, but Mexico suffers from many of the same difficulties as China in terms of lack of infrastructure development, poor communications on what is happening with a specific purchase order or shipment, and cumbersome business practices, licenses and authorities. The sourcing plus logistics decision process described earlier is somewhat parallel between these two countries.

How does a country move up in its ranking on the list of Top 30 countries for trade and expansion? Attention to logistics can certainly be a contributor to a favorable decision on sourcing and market location. Supporting both the carrier/logistics company and the beneficial cargo owner will go a long way in that direction.